Tata Oil Mills Co. Ltd vs Its Workmen

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 51.7 of 1963

Decision Date: 31 March 1964

Coram: P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta

In this matter, the Supreme Court of India delivered its judgment on 31 March 1964. The case was titled Tata Oil Mills Co. Ltd versus Its Workmen. The opinion was authored by Justice P. B. Gajendragadkar and the bench was composed of Justice P. B. Gajendragadkar, Justice K. N. Wanchoo and Justice K. C. Das Gupta. The petitioner was Tata Oil Mills Co. Ltd and the respondent was its workmen. The judgment is recorded in the 1965 volume of the All India Reporter at page 155 and also appears in the 1964 Supreme Court Reporter (7) 555. The case has been cited in numerous subsequent decisions, including reports from 1969, 1972, 1975, 1978, 1984, 1988 and 1991. The central issue concerned an industrial dispute arising from an assault on a co‑employee, the applicability of Standing Order 22(viii), the validity of the domestic enquiry findings, and whether those findings were binding in the absence of a perverse or unsupported conclusion, especially when a criminal trial was pending and the enquiry was not stayed.

The factual backdrop involved two employees of the appellant, identified as R and M, who reportedly waylaid and assaulted another employee, A, outside the factory premises. Following the incident, the appellant conducted a domestic enquiry and sought the Industrial Tribunal’s approval for dismissing both R and M. While the Tribunal approved the dismissal of R, it declined to approve the dismissal of M. Consequently, R was dismissed from service. The respondent then raised an industrial dispute questioning the propriety and validity of R’s dismissal. Upon reference of the dispute, the Industrial Tribunal held that the assault could be treated as a private matter between R and A, concluding that the appellant was not concerned with the incident and that Standing Order 22(viii) could not be invoked against R; the Tribunal therefore ordered R’s reinstatement. On appeal by special leave, the Court made several observations. First, it held that it would be unreasonable to extend Standing Order 22(viii) to cover riotous conduct occurring outside the factory that stemmed purely from a private and individual quarrel, unless the employer could demonstrate a rational connection between the disorderly conduct and the employment of the parties involved. Second, the Court found that the assault by R on A was not merely a private dispute but was linked to a disagreement over the introduction of an incentive bonus scheme, and therefore fell within the purview of Standing Order 22(viii). Third, the Court determined that the Tribunal erred in concluding that the enquiry was infirm because it was conducted contrary to the principles of natural justice; the Court recognized that refusal to adjourn the hearing at the request of the charge‑sheeted workmen, thereby denying them a reasonable opportunity to adduce evidence, could in some cases introduce infirmity, but in the circumstances of

The Court observed that, in the present circumstance, it was not possible to infer any impropriety from the facts. It then examined the Tribunal’s conclusion that the dismissal of the workman was made with malice. The Court held that this conclusion could not be maintained because the Tribunal had ignored a basic principle of judicial reasoning: even when a judge or Tribunal arrives at an erroneous finding of fact or law, the mere existence of an error does not convert the finding into a malicious or bad‑faith decision. The Court noted that the domestic enquiry that preceded the dismissal had been conducted fairly and that the findings recorded in that enquiry were based on evidence that the enquiry officer accepted as true. Consequently, there was no reason for the Industrial Tribunal to re‑examine those same facts. The Court explained that findings properly recorded in a domestic enquiry are binding on the parties, unless it can be demonstrated that such findings are perverse or unsupported by any evidence, referring to the precedent set in Phulbari Tea Estate v. Its Workmen. Further, the Court found that the Industrial Tribunal erred in labeling the result of the domestic enquiry as malicious simply because the enquiry had not been stayed while criminal proceedings against the employee R were pending. While the Court agreed that it is advisable for an employer to stay a domestic enquiry when the incident giving rise to a charge is being tried in a criminal court—especially when the charge is serious and it would be unfair to force the employee to reveal a defence that may be used in the criminal trial—it emphasized that such a stay is not mandatory. Moreover, the continuation of a domestic enquiry despite a pending criminal case does not, by itself, render the enquiry void, unlawful, or malicious, as clarified by reference to Delhi Cloth & General Mills Ltd. v. Kishan Bhan. The judgment then turned to procedural matters, noting that this appeal by special leave arose from the Award dated 28 September 1960 of the Industrial Tribunal, Ernakulam, in Industrial Dispute No. 81 of 1958. Counsel for the appellant and for respondent No. 1 were listed, and the judgment was dated 31 March 1964. The Court identified the central issue of the appeal as the validity of the Tribunal’s order directing Tata Oil Mills Co. Ltd. to reinstate the workman K. K. Raghavan, who had been dismissed effective 14 November 1955. The Court described the appellant as a public limited company engaged in the manufacture of soaps and toilet articles, operating three factories and twelve sales offices, with one factory situated at Tatapuram, Ernakulam, in the State of Kerala, where Mr. Raghavan was employed.

In the facts before the Court, the workman identified as Mr. Raghavan was employed by the appellant at its factory situated in Tatapuram. It was reported that on 12 November 1955 he and another employee of the appellant, named Mr. Mathews, intercepted and assaulted Mr. C. A. Augustine, who held the position of Chargeman of the Soap Plant at the same factory while he was returning home after completing his duties in the second shift. Consequently, charge‑sheets were issued against both Mr. Raghavan and Mr. Mathews on 14 November 1955. Following the service of these charge‑sheets, the appellant appointed two officers to conduct an enquiry. The respondent trade union, however, advised the appellant that a fair enquiry could not be achieved unless an individual who was not based in Tatapuram was appointed to preside over it. Acting upon this representation, the General Manager of the appellant selected Mr. Y. D. Joshi, a Law Officer stationed at the appellant’s Head Office, to conduct the enquiry. Mr. Joshi carried out the enquiry between 27 December and 30 December 1955 and later submitted his report to the General Manager on 7 January 1956. At that juncture an industrial dispute was already pending between the appellant and its employees, and the appellant therefore applied to the Industrial Tribunal seeking approval for the dismissal of both Messrs. Raghavan and Mathews. The Tribunal granted approval for the dismissal of Mr. Raghavan but withheld approval for the dismissal of Mr. Mathews. In accordance with the Tribunal’s approval, the appellant dismissed Mr. Raghavan with effect from 14 November 1955. Dissatisfied with this dismissal, the respondent raised an industrial dispute challenging the propriety and legality of Mr. Raghavan’s termination; this dispute became the subject of a reference made on 3 December 1958. Upon consideration of the reference, the Industrial Tribunal concluded that the appellant was not justified in dismissing Mr. Raghavan and accordingly ordered his reinstatement. The order of reinstatement formed the foundation of the present appeal by special leave. The first question for determination in this appeal concerned whether the Tribunal was correct in holding that the facts established against Mr. Raghavan did not fall within the ambit of Standing Order 22(viii) of the Certified Standing Orders of the appellant. Standing Order 22(viii) provides, without limiting the general notion of “misconduct,” that it includes, among other things, drunkenness, fighting, riotous or disorderly or indecent behaviour occurring either inside or outside the factory. Both parties agreed that the alleged assault took place outside the factory premises and, in fact, at a considerable distance from them. The Tribunal therefore held that the assault was a purely private matter between Mr. Raghavan and Mr. Augustine, a matter over which the appellant had no concern, and consequently concluded that Standing Order 22(viii) could not be invoked against Mr. Raghavan.

Counsel for the respondent submitted that, in construing standing orders of this kind, the Court must take care to exclude disputes that are purely private or individual from the scope of those orders. He argued that employees frequently have to manage private disagreements and that, on occasion, such private disagreements may lead to assault. While such an assault may fall within the relevant provisions of the Indian Penal Code, it does not, according to his submission, come within the ambit of standing order 22(viii). The Court found this submission to be well‑founded. It considered it unreasonable to extend standing order 22(viii) to cover riotous or disorderly conduct that occurs outside the factory when such conduct is the result of a wholly private and individual dispute in which the tempers of the parties have merely risen. The Court explained that for standing order 22(viii) to be engaged, the employer must be able to demonstrate a rational connection between the disorderly or riotous behaviour and the employment relationship of the assailant and the victim. In the present matter, the Court observed that the assault committed by Raghavan on Augustine was not a purely private or individual incident. The occasion for the assault and the motive behind it had been examined by the domestic Tribunal, and the Tribunal’s findings on those points were to be accepted in these proceedings unless they were shown to be unsupported by evidence or perverse. Turning to the report of the Enquiry Officer, the Court noted that the testimony of Mr M. M. Augustine and Mr K. T. Joseph indicated that the assault was carried out by Raghavan against C. A. Augustine because Augustine supported the introduction of an Incentive Bonus Scheme. The report further clarified that the incentive scheme had been approved by one group of workmen and opposed by another, leading to a rivalry between the two unions representing those groups. The witnesses’ evidence showed that, at the time of the assault, Raghavan expressly called Augustine a “black‑leg” (Karinkali) and accused him of seeking increased production in order to obtain a bonus. The Enquiry Officer accepted this evidence and concluded that the assault was motivated by the hostility arising from the dispute over the incentive scheme. The charge framed against Raghavan explicitly alleged that the assault was intended to terrorise the workmen who had contributed to higher production under the scheme and that such conduct was highly subversive of discipline. In light of the evidence supplied by M. M. Augustine and K. T. Joseph, the Enquiry Officer held that the charge had been proved.

In its finding, the Court observed that the assault could not be characterised as a merely personal quarrel between the assailant and the victim. Rather, the Court explained that the attack was linked to a disagreement concerning the proposed incentive bonus scheme, a matter on which the two rival unions held sharply opposing views. Accordingly, the Court held that if Raghavan had struck Augustine solely because Augustine supported a request for greater production, such conduct fell within the scope of standing order 22(viii) and could not be said to lie outside that provision.

The Court then turned to a second issue that had been forcefully raised before it by counsel for the appellant. The appellant contended that the Tribunal was justified in concluding that the Enquiry Officer had failed to conduct the domestic enquiry in accordance with the principles of natural justice, and therefore the Tribunal was entitled to examine the evidence itself and determine whether Raghavan’s dismissal was justified. The Court noted that the relevant legal position was well settled. It affirmed that, where a domestic enquiry is not held fairly—where, for example, the employee is denied a reasonable opportunity to lead evidence in his defence—a Tribunal may set aside the enquiry’s findings and decide the matter on its own merits, uninfluenced by the faulty enquiry. However, the Court observed that, based on the material placed before it, it was very difficult to support the Tribunal’s view that the Enquiry Officer had acted contrary to natural‑justice principles.

The appellant’s argument rested principally on the claim that Raghavan had been denied the chance to examine two witnesses, namely Messrs M. P. Menon and Chalakudi. The Court described the sequence of events. Raghavan had informed the Enquiry Officer of his desire to call these two witnesses and had requested that the Officer invite them to give testimony. The Enquiry Officer replied that it was not his duty to summon the witnesses and that Raghavan should have arranged for them himself. Nevertheless, the Officer attempted to assist Raghavan by writing letters to the two prospective witnesses. In response, Mr Menon wrote back stating that he was unable to appear before the Enquiry Officer. The Officer relayed this response to Raghavan, indicating that Raghavan’s failure to examine Mr Menon could not be attributed to any omission on the part of the Officer.

With respect to Chalakudi, the Court noted that he had dispatched a letter addressed to the Enquiry Officer, which arrived on 31 December 1955, the day the Officer was departing for Bombay. Because the letter was unsigned, the Officer took no action on it and did not grant Chalakudi a few days’ time to appear, as the unsigned note had suggested. The Tribunal had described the Officer’s attitude as unsympathetic and had said that it introduced an element of unfairness into the enquiry. The Court, however, found that the Officer’s refusal to act on an unsigned correspondence did not amount to a breach of natural‑justice principles, especially given that the Officer had explained his position and had taken steps, however limited, to facilitate Raghavan’s wish to call witnesses.

The Court observed that the finding of unfairness in the enquiry could not be supported by the admitted facts. It was not convinced that the Enquiry Officer was required to accept and act upon an unsigned letter. Moreover, the Enquiry Officer had travelled from Bombay to Ernakulam specifically to conduct the enquiry, a move that was prompted by the Union’s desire to have the investigation carried out by an officer external to the local station, with the understanding that the Bombay officer would return once the enquiry was concluded. In those circumstances, the Court questioned how the Enquiry Officer could be held responsible for a breach of natural‑justice principles when Raghavan had failed to arrange for his witnesses to appear before him. Counsel for the respondent suggested that the Enquiry Officer ought to have taken steps to bring the witnesses M. P. Menon and Chalakudi before him. The Court found that suggestion untenable, noting that in a domestic enquiry the officer conducting the inquiry possesses no authority to compel a witness to attend. Just as the appellant was able to produce its own witnesses, Raghavan was likewise required to secure the attendance of his witnesses. The Court inferred that Menon might have regarded appearing before a domestic enquiry as beneath his dignity, while Chalakudi chose to send an unsigned letter that arrived on the day the Enquiry Officer was departing Ernakulam for Bombay. The Court held it unreasonable to allow a charge‑sheeted employee to obtain unlimited adjournments at will. While it acknowledged that a refusal to grant an adjournment could, in some cases, deprive the workman of a reasonable opportunity to present evidence and thereby introduce infirmity into the enquiry, the particular facts of this case did not justify such a conclusion. The record demonstrated that the Enquiry Officer had taken extraordinary measures to assist Raghavan, and any failure of the witnesses to appear on time could not be attributed to him. Consequently, the Court concluded that the Tribunal erred in holding that the enquiry was infirm because it was conducted contrary to the principles of natural justice. The Court then turned to the question of whether Raghavan’s dismissal was motivated by mal‑afides or amounted to victimisation. Regarding the allegation of victimisation, the Tribunal had expressly found against the respondent, stating, “I do not for a moment believe that the management foisted a case against the ex‑worker.” The Court noted that the Tribunal found no sufficient evidence to show that the management or its manager, Mr John, was motivated by victimisation or unfair labour practice, a finding that clearly favoured the appellant.

In this case, the finding that the employer’s conduct was not in line with proper labour practice was expressly held to be in favour of the appellant. The Tribunal, however, concluded that the Enquiry Officer had failed to grant an adjournment to Raghavan for the purpose of examining his witnesses, and considered this omission to demonstrate an element of malafides. The Tribunal also observed that the charge framed against Raghavan was based on standing order 22(viii) even though the Tribunal earlier opined that the matter did not fall within the scope of that standing order. The Tribunal regarded this inconsistency as a further indication that the proceedings were affected by malafides and reflected an improper motive. Accordingly, the Tribunal concluded that both the alleged failure to adjourn the hearing and the alleged misuse of standing order 22(viii) together established a finding of malafides. Regarding the first ground, this Court has already held that the Tribunal was not entitled to blame the Enquiry Officer for not postponing the hearing beyond 31 December 1955. Concerning the second ground, this Court is surprised that the Tribunal regarded the use of standing order 22(viii) to frame a charge, despite its own opinion that the order was inapplicable, as evidence of malafides. The Court observes that the Tribunal has disregarded a basic judicial principle: an erroneous conclusion of fact or law does not by itself render the conclusion malicious. Moreover, this Court is satisfied on the merits that the Tribunal erred in holding that standing order 22(viii) was inapplicable, and therefore the Tribunal’s conclusion that Raghavan’s dismissal was malafide cannot be sustained.

There is an additional point that counsel for the petitioner raised before this Court concerning the scope of an employee’s right to present evidence in industrial proceedings. In Phulbari Tea Estate v. Its Workmen (1960) 1 S.C.R. 32, this Court held that even when a domestic enquiry is found to be defective, the employer may attempt to justify the dismissal by offering evidence before the Industrial Tribunal that is hearing the related dispute. Counsel for the petitioner contended that, by analogous reasoning, where an employee is unable to present his evidence before the domestic tribunal through no fault of his own, the employee should be granted a opportunity. He further argued that the employee should be allowed to present his evidence in the Industrial Tribunal proceedings as a matter of fairness and procedural justice. In this Court’s opinion, that contention is not well founded because the underlying principle cited does not support an automatic right to re‑open the domestic enquiry. The decision in Phulbari Tea Estate (supra) is based on a fundamental principle of industrial adjudication that properly recorded findings of a fair domestic enquiry cannot be re‑examined by an Industrial Tribunal. Such re‑examination is permissible only when the findings are perverse, lack evidential support, or are otherwise invalid for reasons of that character. Consequently, even if the Industrial Tribunal does not accept the domestic enquiry’s findings, that refusal does not automatically prevent the employee from justifying the dismissal in the industrial forum.

In this case the Court explained that an employee may contest the merits of his dismissal before the Industrial Tribunal only if he is able to present evidence to that Tribunal and convince it to accept his version of the facts. That principle, however, could not be applied to the present dispute because the domestic enquiry that preceded the reference to the Industrial Tribunal had been conducted fairly and the Enquiry Officer had afforded Raghavan ample opportunity to adduce his evidence. The Court observed that if the employee had been denied a reasonable chance to present his case, the enquiry itself would have been defective; in such a circumstance the employer would have been required to prove the dismissal before the Industrial Tribunal, and the Tribunal would have been justified in disregarding the findings of the domestic enquiry altogether. Since, on the contrary, the enquiry was fair and all reasonable opportunities had been given to the employee, the Court could not accept the argument that the absence of witnesses to support the employee’s case should automatically entitle him to re‑present the same evidence before the Industrial Tribunal. The Court warned that accepting such a plea would render every domestic enquiry ineffective, forcing every industrial dispute to be tried anew before the Tribunal. Accordingly, the Court declined to adopt Mr Menon’s submission that the Tribunal was justified in examining the merits of the dispute independently in the reference proceedings. Because the enquiry had been fairly conducted and its findings were based on evidence that the Enquiry Officer regarded as credible, there was no justification for the Industrial Tribunal to revisit those same facts. The Court reiterated that findings properly recorded at a domestic enquiry bind the parties unless they are shown to be perverse or unsupported by any evidence. The Court then addressed another issue raised by the Industrial Tribunal, namely that the domestic enquiry should have been stayed because criminal proceedings had been instituted against Raghavan. Referring to the decision in Delhi Cloth and General Mills Ltd. v. Kushal Bhan, the Court held that it is advisable for an employer to stay a domestic enquiry when the incident giving rise to a charge is being tried in a criminal court, especially where the charge is of a serious nature, because it would be unfair to compel the workman to disclose a defence that he intends to use in the criminal trial. However, the Court emphasized that the proposition that a domestic enquiry may be stayed pending a criminal trial is distinct from the proposition that an enquiry which proceeds despite a pending criminal case is automatically vitiated or tainted as malicious or illegal.

The Court observed that describing the domestic enquiry as either void as a matter of law or malicious was an extreme characterization. In fairness, the Court noted that the counsel for the respondent had not attempted to justify such an extreme view. Consequently, the Court concluded that the Industrial Tribunal had erred in labeling the outcome of the domestic enquiry as malicious, particularly because the tribunal’s reasoning was based in part on the fact that the enquiry had not been stayed while criminal proceedings against Raghavan were pending. The Court therefore held that the domestic enquiry conducted in the present case had been properly held and had been carried out in a fair manner. It further held that the factual findings recorded by the Enquiry Officer were based on evidence that the officer had accepted as true, and therefore the Industrial Tribunal was not entitled to revisit those same factual issues and arrive at a contrary conclusion. As a result, the Court allowed the appeal, set aside the order issued by the Industrial Tribunal, and ruled that the reference made to that order should be answered in favor of the appellant. Before concluding, the Court noted that the counsel for the appellant had voluntarily offered to pay an ex gratia amount of one thousand rupees to Raghavan, in addition to the amount that had already been paid to him by the appellant pursuant to the Court’s earlier order staying the appellant pending final disposal of the appeal. The Court declined to make any order as to costs and recorded that the appeal was allowed.